' Plaintiff corporation has filed this suit for recovery of Rs,11,23,635.72 against the defendant Insurance Company on the averments that under the Pakistan Insurance Corporation Act, 1952, it is compulsory that 30% of insurance business under-written by all Insurance Companies be ceded to the plaintiff corporation, and in consideration of such cession of 30% business it pays the claim in the same proportion to such companies. It is the case of the plaintiff and not disputed by the defendant that a joint and mutual running account is maintained by the parties and such accounts are settled periodically.
2. According to the plaintiff sometimes back there was serious litigation between two groups of the Directors of the defendant company in which the High Court had appointed a Receiver, Because of such incident financial condition of the company had gone down considerably and it could not pay amounts due and outstanding with the consequence that plaintiff through legal notice dated 3-4-1975 called upon it to pay the outstanding dues. In its reply letters, the defendant admitted the amount claimed by the plaintiff but took exception to excess amount of Rs,96,898.18 claimed by plaintiff. On plaintiff's clarification, the defendant by its letter confirmed the outstanding amount of Rs,5,31,802.25 but took exception to Rs, 25,252.88 as excess amount claimed by the plaintiff: There was exchange of correspondence between the parties till July 1978 when lastly plaintiff corporation called upon the defendant through a legal notice to pay up the entire amount, but without any response, hence this suit.
3. Defendant company in its written statement verified under the signature of S. Ashfaq Ahmad, Zonal Manager of the company did not dispute the relationship between the parties, dispute between two groups of company Directors and appointment of Receiver by Lahore High Court, but explained that due to mismanagement on the part of the Receiver proper accounts were neither maintained nor audited. Company narrated certain events of atrocities on the part of the then Government and claimed that the letters addressed to the plaintiff on behalf of the company being unauthorised, did not represent correct accounting position and are thus not binding on it.
The defendant stated that the company was prepared to pay actual outstanding amounts after the accounts of plaintiff were reconciled and corrected with the audited accounts of the defendant. Defendant raised legal pleas with regard to absence of cause of action and non- maintainability of the suit.
4. Pleadings of the parties were reflected in the following consent issues:- ISSUES:
(1) Whether the parties maintained a joint and mutual running account for the Insurance business?
(2) Whether a sum of Rs, 11,23,635.72 is payable by the defendant to the plaintiff?
5. In support of its case, plaintiff corporation examined an employee Abdul Rasheed Sheikh whereas the defendant company after seeking a number of adjournments did not adduce any evidence in rebuttal.
6. When this suit was listed for arguments it was adjourned from time to time at the instance of learned counsel for defendant who, however, did not turn up on the last two dates of hearing. Mr. A.
Rauf, the learned counsel for the plaintiff has taken me through the evidence on record. To my mind Issue No, 1 is redundant as there is no controversy with regard to maintenance of joint and mutual running account for insurance business between the parties. Sole issue arising for decision in this suit is the quantum of liability on the part of the defendant company.
7. In his evidence, plaintiff's witness besides stating that it is compulsory for all Insurance Companies in Pakistan to compulsorily re-insure 30% of their policies with the plaintiff, stated that the plaintiff also undertakes to give treaties for re-insurance to the Insurance Companies. In the case of the defendant 30% was compulsorily reinsured but so far as treaty is concerned, it is always as per agreement. The witness did not produce any agreement in evidence and frankly conceded that he did not have a copy of any agreement between the parties. The learned counsel for the plaintiff in, his arguments urged that the business relating to treaty governed by section 27 of the Pakistan Insurance Act is renewable after every year or two years. He further stated that as no treaty has been exhibited in evidence plaintiff's claim on this account is founded on oral evidence of the witness. After the close of arguments on 13-8-1997 he appeared in Court on 18-8-1997 and submitted a photo copy of an agreement dated 15-4-1960 purportedly executed between the parties but in law it cannot be taken into consideration as none was filed in Court and exhibited in evidence. Indeed no such treaty or agreement was pleaded by the plaintiff and in law I am neither bound nor inclined to take this document into consideration at this inordinately belated stage of the proceedings.
8. Plaintiff's witness further stated that the suit against the defendant was filed because defendant neither paid 30% of the compulsory insurance amount nor did it pay for the Treaty Insurance, In support of his assertion that the defendant has been acknowledging the outstanding liabilities and has also paid some instalments the witness produced a bunch of 20 letters Exh. '5/1' to '5/18/1-3'.
While the claim of the plaintiff corporation in the plaint has been worked out as on 3142-1977, learned counsel heavily relied on letters Exh. ' 5/10 ' and ' 5/14 ' dated 25-8-1984 and 27-11-1984 respectively., purportedly written by the defendant which prima facie contain acknowledgement of liability amounting to Rs,10,21,258.63 as on 31-12-1982. According to the first letter in case the difference of commission is added to this amount, outstanding balance would be Rs, 11,57,631.08 and not Rs, 13,91,125.46 as demanded, whereas as per second letter if the difference of commissions is added to this amount it will come to Rs, 11,59,326.08 and not Rs, 15,05,783.60 as demanded. I am not inclined to consider both these letters for determining actual liability of the defendant for the reasons firstly that such letters admittedly were addressed during the pendency of the suit; secondly that the amounts worked out are upto 31-12-1982 and thirdly for the reason that such amounts most probably include the amount on account of payment towards Treaty Insurance which was neither pleaded nor admitted in the pleadings of the parties. In my view it is difficult to accept the contention of the plaintiff that the defendant having admitted its liability on account of a current and mutual account in 1984 may be burdened and saddled with the amount claimed in the suit which was filed in July, 1978 reflecting the amount due as on 31-12-1977. The contention is thus far fetched and devoid of any substance.
9. Finding him on weak wicket, learned counsel for the plaintiff then relied upon statements of accounts between the parties as reflected in Exh. '5/18/1' to '5/18/3' such statements are said to be reconciliation statements in respect of the account of the defendant company. These are not only signed by a representative of the plaintiff corporation, but also by Ahmed Ali Khan, an authorised agent of the defendant company. These statements can be lawfully explained with the stand taken by the defendant in the written statement that it is prepared to pay the outstanding amounts after reconciliation. No doubt such statements govern the period ending December, 1982. Mr. Abdul Rauf, learned -counsel for the plaintiff with the active association and assistance of plaintiff's witness Abdul Rasheed Shaikh has worked, out the amounts admitted by the defendant company in Exh.5/18/2 at Rs, 9,88,946.19. Or due on 31-12-1977. In the absence of any evidence in rebuttal, I am of the view that this amount is admittedly due and payable by the defendant. There being no controversy with regard to this amount, it requires no further proof for determining the actual liability of the defendant company for the amount outstanding.
10. For the aforesaid facts and reasons, plaintiff's suit is decreed in the sum of Rs, 9,88,946.19 with interest at 10% from the date of suit till realization. Plaintiff shall also be entitled to proportionate costs of the suit.